The Nokia 1020 represents something fairly remarkable: the nearly flawless melding of a smartphone and a camera. The assumption up until now was that while such a mash-up wasn't strictly impossible, it would surely require a laundry list of unpleasant compromises. Instead, what we've got is an entirely new kind of gadget. One that, most remarkably of all, works as advertised.

What Is It?

Basically, the guts of other top Nokia Lumia phones (925, 928) paired with an absurd-sounding 41-megapixel PureView camera, and slightly more RAM. It costs $300 with a two-year contract on AT&T.

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Why Does It Matter?

For years, we've been hearing about how no one would ever need a point-and-shoot ever again because smartphone cameras were rapidly displacing them as our memory keepers of choice. Your smartphone offers two advantages over point-and-shoots: They're always on you, and they're connected to the internet. And starting around this time last year, the cameras in many flagship phones started getting so good that you could start to convincingly argue that we'd reached this moment at long last. Almost.

With the Lumia 1020, that day might've finally arrived.

Design

The Nokia 1020 is an amalgam of disparate pieces coming together. The body is made of a matte polycarbonate that feels sturdy and has enough grip to it that it doesn't feel like it's going to slide out of you hand. The back doesn't have quite the pronounced curve of last year's Lumia 920, but it's also doesn't have the boxy edges from the Lumia 928. It's a fine compromise.

The phone would actually be very thin if it weren't for the the circular camera bulge on the back. It's a striking design element that disrupts the other wise elegant shape, although not necessarily in a bad way. The camera's a lone, powerful eye that glares out from the back, calling attention to itself like a cyclops. It's such a distinctive feature that it might seem more pronounced than it actually is. But it's a bump that's easy enough to forget once the 1020 is safely back in your pocket.

In fact, in some ways it's an advantage; I particularly liked that when the 1020's sitting on a table or desk, the camera props the phone up so that it's easier to see what's on the screen compared to a phone that's lying flat on its back.

The Lumia 1020 is equal parts camera and phone and, as such, it either feels too big or too little, depending on how you're using it at any given time. But while it's thicker and heavier than its mobile competitors, it's not outrageously so; the 1020 weighs in at 158g; that's lighter than the Lumia 920, and just a smidge heavier than the 143g HTC One. It's no featherweight iPhone 5, but then again, not everybody's into that anyway. And compared to most point and shoots, well, when's the last time you comfortably walked around with one of those in your jeans pocket? If we're being honest and unequivocal, the answer is never.

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No, if you're interested in the Lumia 1020, it's for that camera. And yes, it's great.

Let's get one thing out of the way right off: 41-megapixel resolution is a bit of a misnomer. Like the Lumia 1020's 41-megapixel Symbian OS predecessor, the 808 PureView, the camera is using all those megapixels to the end of actually creating 5-megapixel images. The camera is "oversampling" light for each pixel it hopes to actually render in the final image, and uses an algorithm to stitch together the many different samples into the best possible version of the image. In practice, that oversampling also allows you to zoom in to a small portion of an image without losing quality. It's impressive technology that comes with the lone drawback that it slows the camera down a bit. That extra 1 GB of RAM doesn't cut the lag in the one place where you would hope it might.

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The camera can work like either a simple point-and-shoot or a more sophisticated shooter, depending on your preference. If you'd like, you can just hold up the phone and snap a picture using the 1020's hardware camera button on the side, or the shutter button on the screen. But to really take advantage of the phone's superior camera, you're going to want to use Nokia's new "Pro Camera" app.

To go from simple point-and-shoot mode into pro-mode, you simply give the on-screen shutter release a little swipe and a neat slider-based interface gives you full manual control of camera settings from white balance to ISO, and even focus. And man, the manual focus is so cool. Nothing like this has ever been done on a smartphone camera before.

This oversampling technology, and awesome new controls are just a small piece of the puzzle here. The Lumia 1020 incorporates lots of camera tech that Nokia has been adding to its phones over the last few years including optical image stabilization, which works wonderfully to keep your videos and low-light photos steady; a xenon flash, which provides more natural illumination than the LEDs in most cameras; and a wide-angle fast f/2.2 aperture lens for better depth-of-field and low-light photography. None of these features are particular to this phone, but they all contribute to its solid performance.

How badly does this camera kick every other smartphone camera's ass? Let's take a look at some comparissons with last year's Lumia 920, the iPhone 5, and the HTC One, which up until now has been our favorite smartphone camera.

In daylight, zoomed out, the only camera that comes close to capturing the dynamic range captured by the Lumia 1020 is the HTC One. In fact, from there it might seem like it wins.

But then when we take 100-percent crop—basically a really zoomed in area—you start to see how that oversampling makes a huge difference—and how it expands our options. The Lumia 1020 leaves you with a huge amount of extra data so you can keep zooming in without blowing up your images. And look at how crappy the iPhone looks at comparatively. (As we've noted before, zooming in as far as you possibly can on the 1020 will leave you with disappointing results—but they're also better than what anyone else can do.)

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Oh and how does the camera do in low-light? Much, much better than the competition. We return, as always, to our friend the Assassin's Creed statuette. This photo was taken in absolutely terrible light, and it still holds up well.

As for colors, check out this shot of flowers below. The HTC One and iPhone both oversaturate, whereas both of the Lumias get a more accurate color representation. The 1020 in particular is beautiful.

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On both image quality and functionality, the Lumia 1020 has the best camera that's ever been put in a smartphone. Hands Down. And it's also a very capable phone; it's fast, and its display is every bit as crisp and wonderful as the 928. And all of that in a package compact enough that it's not just some throwaway concept—this is a real product for real people. For the first time ever, mankind has made a phone that's really two things at once without being a monstrosity.

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It is completely unreasonable to say that I would prefer if the camera did not take over a second to save the beautiful images it takes since what it's doing with that time is crunching a kiloton of data, but yes, it would be nice if the images saved faster.

Now is also a good time for your standard Windows Phone 8 caveat. It's getting better, it's still not there. There are still plenty of apps you will miss, there are still lots of hiccups that don't make sense. That should get better soon, when Windows Phone 8.1 rolls out. But that could be a longer wait than you're prepared for.

The other huge drawback of the 1020 is the price tag. $200 is the going contract for a new top-of-the-line flagship smartphone from Apple or Samsung. Sure, a 32GB iPhone costs $300, too. But Windows Phones are traditionally $100. That Nokia wants to charge $300 for this thing on contract is going to offend some people's sensibilities. It certainly offended mine.

Should You Buy This?

If you're cool with Windows Phone and you want the communication device in your pocket to take superior photos, definitely get this phone. For a few years now, Nokia has been developing its design and technology to make this exact product: The smartphone that people who want to take good pictures will buy. Here it is.

You have to really, really care about your pictures though. Because $300 for a phone with a half-baked OS is a tall price to pay for photographic dominance.